tv Trending Business Bloomberg May 22, 2016 9:00pm-11:01pm EDT
♪ it is monday, the 23rd of may. i am rishaad salamat. this is "trending business". ♪ rishaad: right, taking you to tokyo, singapore, and annoy. japanese exports dropping, the yen strength blamed. imports and exports worse than forecast, a wider trade surplus. oil sliding again with iran rejecting calls for a freeze.
the bedding is on for an supplyl rally due to disruptions in canada and nigeria. president obama in asia, looking for stronger economic security s influenceith china' in vietnam. let us know what you think. follow me on twitter @rishaadtv and use #trendingbusiness. we've seen some swings between gains and losses, not a lot of conviction in this market. we had a little disappointment over the weekend with that failure of consensus from that g7 meeting of finance ministers and central bankers. we are waiting to hear from janet yellen. looking for signals as to
whether the fed will be going in june. also, what the bank of japan will do. there is speculation that they could buy more bts next month. gains, deeperier in the red. japanese stocks extending losses. the yen is not doing much. that trade data certainly weighing on japanese equities. taiwan driven higher by apple suppliers. throughkness coming from southeast asia as the likelihood the fed will be , earlierates come july than what markets have been pricing in. numbers in a few hours time, so will be watching out for that. the kospi is flat at the moment.
oil with some declines. iran not joining in on that freeze. oil down by 4.5%, the top the kleiner on the asx 200. weakness in japan, off by 3/10 of 1%. also some weakness when it comes to the iron ore miners. bh billiton down. theres despite the fact has been a retracement in the iron ore price following the plunge we saw last week. taiwan markets, possibly apple had put through in order for 78 million iphones from suppliers. we are looking into the details of that report, but we are seeing that positive effect when it comes to some of these suppliers and assemblers of iphone. 1.13%, catcher makes
casings for iphones, up 2.6%. they said they would be doing a glass front for the iphone. making bodies for the iphone, upside in the session today. a quick look at that commodities space. at the moment, a little downside and oil. , not a lot of consensus on where it goes. one part suggest we are to bearish, another saying it will be hard for japanese policymakers to curb any further gains in the yen given the political sensitivities ahead of that u.s. election. moment, strengthening to bit. rishaad: getting back to exports out of japan, down the seventh
consecutive month. lower,howing imports trade surplus of almost $7.5 billion. what of these numbers say about economics? yvonne: we spoke with dr. schiller during the g7. he said two years ago there was an initial euphoria when it came we see aics, and now stronger yen up 9% and exports have declined for the past seven straight months. shipment figure was quite disappointing, down 10.1% for april, which is worse than expected. we saw exports to the u.s. as well as china falling. exports to china falling 7.6%. we did see some supply constraints during april after those earthquakes.
that might have restricted or effected some shipments when he came to car parts and electronics. it was the drop in oil prices that dampened imports even more, 23.3% down in imports for the month of april. oft leaves a trade surplus 7.5 billion dollars, bigger surplus and we saw in march. that is nearly 2.5 billion dollars more than what economists were expecting. this goes to show the pressure that the prime minister has to revive growth, especially after he did not get the blessing from g7 nations when it came to what policy levers they should pull next to revive growth. of tensionn, a lot about that over the weekend on what to do next since it has appreciated so much this year. the u.s. not particular convinced when it comes to intervention. we did see some fiction bween the u.s. and japan, the sharp at dissonance and views in some time.
the finance minister of japan reiterated that the recent moves in the yen have been one-sided, speculative, but jack lew saying that there is a high bar when it comes to what disorderly movements consist of. he brought an example of the 2011 earthquake and sunol me back in 2011 in japan that basically let japan intervene in the currency then. we are still a long way away from there, but tensions were a bit high. -- competinging views when it comes to reviving global growth and response. that will be more clear when the leader summit begins this thursday. hopefully we can see some kind of consensus, but it seems highly unlikely. rishaad: thanks. more on that story through the course of our show. we will have a look on what's going on with the japanese
economy. tweet us your thoughts at @rishaadtv, include #trendingbusiness. the head of iran's state owned oil company says they have no willingness to freeze production and tell they reach pre-sanction levels. this is like a bit of a red herring, isn't it? >> the prospect of a freeze has been dead since stildoha. deal was always predicated on iran being part of it. it's probably going to be a bit of a non-event in june, because we have seense prices crime to levels that were projected towards the end of the year. there probably won't be much going on at the meeting in june next week. rishaad: we have oil creeping up to $50 a barrel.
the thing is, ok, what happens next? is this rally set to continue? fast, ifmb so far so the february lows for wti, the price is up 80%. it has made an extraordinary rise. whether it can move from here is a good question. disruptions are just disruptions, so that supply will come back onto the market at some stage. those wildfires have started to ease and some companies are talking about restarting those operations. crude at the u.s. highest level since 1929. we have to see them come down before we can move any higher. rishaad: thank you, indeed. let's turn to the federal reserve. more and more members of the looking to normalize
monetary policy sooner rather than later. we have that story and others. it may be a presidential election year, but the head of the san francisco fed said politics would not impact the central bank's decision to raise rates. williams also said the economy should be strong enough to merit a rate increase this year, but did not indicate when that should happen. weems does not vote on monetary policy into 2018. he downplayed the risk of a recession for 2017. investors now see a 28% chance that the fed will raise rates next month. shares and blue scopes deal of making gains in sydney after the company raised its profit guidance, saying it sees 190 $5ng profit at million for the second half compared to the previous forecast of $151.3 million. they say that is because the impact of cost cuts have been felt sooner than expected, and
because of higher steel and iron ore prices. according to a statement to the ,hejunong stock exchange hanergy boss. regulators have been investigating. he owns more two thirds and controls the parent company. rishaad: thank you. on our website, how premise to modi's many shuttle is set to blast into the race for space. it's on bloomberg.com/asia. coming up, what's on the agenda as president obama makes a historic trip to vietnam. just ahead, our next guest says the fed could be about to make a huge mistake. details are coming up next. ♪
and you are back with "trending business". john william saying the united states economy should be ready for a rate rise this year. markets pricing less than 30% next month. our next guest things the fed would be making a mistake by raising rates too soon. now from singapore. why would it be such a mistake? in junelihood of going is probably a red herring with the brexit vote.
i suppose a brother take the wait and see attitude then. beit is wait and see may through june, but certainly they are penciling it in for july. my concern is while they keep talking about the headline rates of inflation approaching targets, i don't believe a psychology of inflation is embedded in the economy, so raising interest rates too soon could give an inflation rate falling in growth pulling back. rishaad: on some measures, inflation is going up. going to keepbly rising? that is the point, isn't it? >> very much so. if you look at the surveys of consumers or industrialists, some of those numbers would show the expectation of consumers and industrialists about inflation for the future, some of those have been sliding. not sostreet, people are convinced that inflation is embedded in the economy, hence the fed should not be following through with tighter monetary policy. rishaad: is that why you are
to raise your portfolio allocation to gold, 10% of the portfolio ideally in the precious metal. >> yes, ironically even though there is not much inflation to our mind, we believe that policy mistakes by central bankers, in this case the federal reserve, will lead to greater volatility in the global economy, may be slide in growth rates in the future, creating more problems for the financial system. hence, we believe that typically a client should have 5% to 10% of their portfolio and gold and should be buying after the recent dips of the last week. rishaad: that's one place to put your money for your private isents, but the other place to keep an i on middle eastern at sets -- assets. >> worth looking at the saudi
arabia equity market. not had greate access, but things will change over the next 1-2 years. believe there is something underway here in terms of a significant structural change. with its problems, saudi arabia is growing 2% to 4%. the improvement in oil prices is quite a surprise, and therefore we could see some upward surprises, so i do think that with structural change in low by he way she's and a positive story for the next 1-2 years, this is a part of the world to be keeping an i on. rishaad: structural change remains just a story at the moment. we want to see roe change on the ground, don't we? that's perhaps when this advice comes to some sort of fruition. >> absolutely. although, we have seen retail investors in the past invest
with blind faith, so we have seen very high evaluations -- leigh wishon's on saudi equity without delivery. i do believe the government will deliver here. it's coming from a low base with a lot of skepticism, but that gives you an entry point. that gives you a relatively low valuation for a lot of hope, but for what could be some very good delivery. other assetht, the class you have been looking at is residential real estate. we have predictions of property pricess in hong kong, falling pack. singapore, price falls as well. you're saying this is a hugely overvalued asset. at what point does it become a good value asset? need a good 30% or 40% setback in most parts of the world. cheap credit has a lot of people buying properties, second property, fourth property, and are hoping to rent out.
those rents are under pressure because the average person on the street cannot afford the average level of rents we have seen it recent years, particularly with wage growth it seems benign. a lot ofeen speculation in investment, particularly in london, where prices rose 35% to 40% in 18 months. even if interest rates don't rise spectacularly, i do believe there could be quite a significant price correction. rishaad: looking to this part of the world and singapore, but further east, what you like and what do you not? >> we still like japan. it all has the bad headlines at the moment, and suppose something like a disappointment. they did not get the support for the yen to depreciate, but i do believe we will see follow through with a budget of 1% of
gdp to provide a stimulus to growth. i think the bank of japan will be forced to come to the table was some measures to put some downward pressure on the yen. both of the factors could bring a further rebound in japanese equities. rishaad: great seeing you. have a good one. the stories making headlines around the world. >> egypt is sending a submarine to search for the black box flight recorders and has warned against jumping to conclusions about what happened. says also nares remain open and nothing has been proved. the flight crashed into the sea on thursday from paris to cairo. the french air accident investigator says the plane sent automatically messages about smoke and the cabin moments before it lost contact. later todayexpected in the trial of a baltimore police officer charged with the
arrest and death of freddie gray. he is accused of assault, misconduct, and reckless endangerment. freddie gray died after his neck was broken while he was handcuffed and schappell -- shackled in the back of a police van. they say he unlawfully arrested freddie gray and was negligent for not buckling him in. recordemains in a heatwave, temperatures topping 51 degrees celsius at times. authorities issued a severe heat a third in the western states. the monsoon is expected to bring cooler temperatures from the beginning of next month. india has two years of poor rains with droughts putting extra pressure on the economy. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. coming up, hong kong deals with the triple economic property, and financial sectors, charting the headwinds, coming up just ahead. ♪
china's third highest official has warned hong kong to avoid rocking the boat or else risking harming the city's economy. he believes street protesters are not helping the cause. it is already rocking hong kong's economy. there are some signs of leaking and hong kong's economy. as series of charts represent this. the first one shows hong kong's chief executive is the city's least popular leader since the return to china's rule in 1997. we also have the slump in retail, property, and financial sectors. this is a poll done by hong kong university. is hoveringty
around this 40 point level on a scale of 0-100. it already started at a lower base then his two predecessors. butpularity is one thing, we have some more measurable metrics. they show that hong kong's economy is starting to slow down. this is about retail sales. ,oing back to june 2010 to now we have been seeing this downward trend coming through in retail sales. february,ig lunch in but over the first quarter of 2016, down by 12%. that is due to the crackdown on luxury and excess, but we have seen this play into the overall economy. contracting .4% in the first three months of the year compared to the prior quarter. that was the steepest drop since 2011.
also, the drop we have been property hong kong prices. you can see that they are down over 12% from the peak in september last year. is forecast that we can see home prices fall even further. goldman sachs has been predicting a further 20% drop coming through in hong kong we start toces as see borrowing costs soar, and the number of hong kong homeowners with apartments less than their mortgages has soared in the first quarter. alsoust these metrics, but sales in hong kong down 41% this year, offshore bond sales slumping 64%. street protests or not, the hong kong economic vote could already be rocking. indeed. thank you, the big adaptation of the angry birds game reveals why the birds are so angry.
rishaad: a look at our top stories. asia-pacific stocks starting lower as oil extends losses, iran refusing to join any production freeze. energy explores and utilities leading losses in tokyo. g7 finance talks exposed discord between japan and the united states on currency policy. is the currency. japanese exports dropping for a seventh straight month.
overseas shipments contracted 10%, imports dropped 23%, a trade surplus of $7.5 billion. it underscores the mounting challenges to efforts to revive the economy. president obama arrives in vietnam, a weeklong asian trip, building stronger ties in the face of china's influence. he is the third sitting president to visit since the end of the war. engage an is eager to regional power with a rapidly expanding middle-class and promising market for american goods. the first trading day underway in hong kong and shanghai. a lot of volatility this morning. it is looking like a down day across asian markets on the first day of trading. by 6/10 of 1%.
chemicals, industrials, this one the back of oil prices retreating. same story when it comes to sydney stocks, the asx 200 down 9/10 of 1%. iron ore miners as well, despite the retracement in prices last week slows. also, weakness from southeast asia, malaysia down by a quarter down bytraight times 4/10 of 1%. it is the energy space leading the index lower there. shanghai opening a 10th of 1% that market has in not doing much over the past few weeks, sitting at that 2800 level. point for support. back, downng giving to tenths of 1%. we are in a wait and see mode.
see about waiting to a potential move in june. this is what were looking at in terms of commodities. is extending its retreat, down by .5%. focus,c meeting in comments from iran that they will not be joining in on this production freeze. the yen is starting to climb thatte counterintuitively miss on trade numbers for imports and exports. rishaad: thank you, indeed. two days of talks between g7 finance ministers ended without consensus. there is a growing divide between united states and japan. our chief asian economics correspondent was there.
what is the difference in these positions? >> on of the biggest differences between the japan and u.s. in years on the foreign exchange. the japanese finance minister keeps making the point that he trading has yen been speculative and one-sided. the g-20 and g7 don't allow governments to intervene to help exporters, but there is a clause if market conditions are disorderly, a government can intervene. the problem is what defines disorderly conditions. when the 9% rise was put to jacob lew, jacob lew made it is a high bar for disorderly. the question is, does japan want to intervene? that is the point here. there have been many lines in the sand drawn and we have not had any firm evidence. they keep making the point
that they are not interested in a competitive violation. however, the fact that they keep making this point that they have the option with markets becoming disorderly is interesting in and of itself. again was to go off on a tear and start rallying, japan that if itwarned you is disorderly, we can go in and sell the yen. rishaad: some of this is reflective of this year strengthen the yen trade numbers? >> definitely. those numbers highlight the challenge for the prime minister. the hard to look past impact of a strong yen on japanese exporters, but we shouldn't knowledge that global demand is also week. it's not just exchange rates. consumers are just not buying that much japanese goods. rishaad: thank you very much indeed.
right, ok, president obama attending a summit of leaders in japan later this week. he started off in asia in vietnam. the former enemies are edging closer together in response to china's growing influence and assertiveness. our hanoi bureau chief joins us on the line. how is the president's visit being seen in vietnam? obama and thedent the wartates despite for decades ago, they are exceedingly popular here. u.s.ietnamese view the president's visit as being critical in helping it to hedge and china'schina assertive behavior in the south china sea. historically, vietnam has been leery of u.s. interference in its political system.
but china's placing of an oil rig in the summer of 2014 off the coast change the equation. what is theht, president hoping will really come out of this visit? i think president obama is looking to send a signal to china that america intends to have a presence in the region, and it is working to draw closer to vietnam and other countries in the region. is aligned with vietnam and other countries on the issue of the south china sea. most ofaims pretty much it as its own territory, where is the u.s. and other regional nations view it as eating mostly international waters. fullyis considering lifting the arms embargo on vietnam. live thepartially onlygo in 2014, and it has
had to defense contractors supposing him's in hanoi. rishaad: human rights are a bit of a thorny issue for both sides here. how will that play out? >> just before obama arrived last night, vietnam released a roman catholic priest and dissident who has spent much of the past two decades in prison. obama is expected to bring up human rights with government officials and publicly. he will meet with dissidents. however, the administration will be seeking ways to build ties with vietnam without the overhang tensions of human rights. rishaad: thanks very much indeed for that. in on somes check other stories we are following. approving aers first round of austerity measures to unlock more emergency support from the eurozone. the prime minister secured 153 votes in the 300 seat chamber. opposition parties rejected most of the measures and accused him
of ruining the economy. tomorrowp leaders meet to assess greece's compliance with the bailout agreement struck last year. tour yoda -- toyota is designing better wheelchairs, giving them access to balancing technology. it introduced a new version of its wheelchair to walk up and down stairs and help disabled people stand face-to-face with one another. the agreement coming after toyota pledge to spend a billion dollars over five years on research into artificial intelligence and robotics. make plans and china because it is cheaper to import them. the prison maker will make a final decision by the middle of the year. it says chinese demand for jets is falling due to lack of government incentives and tax laws make it cheaper to import planes anyway. a former pboc advisor saying china may miss a historic
opportunity if it does not invest in infrastructure. saying it is the best way to boost growth and will undermine beijing's efforts to overhaul the economy. let's get over to beijing, what is going on here? >> good morning. he is highly influential as an advisor to the central government, but his organization , the chinese academy of social sciences, is a key advisor to the chinese government, so they listen to what he has to say. he is saying infrastructure spending is the way to go. roads, bridges, railways, airports, and the like. despite of course the risk that orht have in inflating exacerbating the credit binge. he says china may miss a historic opportunity right now if it does not increase infrastructure spending with the economy slowing as it is in the
mid-6% range. he does not think it would undermine the reform efforts. because timing is right the global economic downturn gives good opportunity to do this right now, falling commodity prices as well, low interest rates generally, especially in the west, and the overcapacity we have seen in key industries in china. this could whittle away some of that overcapacity. the critics could say we did stimulusrillion won in in 2009 in response to the global economic crisis and look where we are now. we have this debt load at the municipal level that they had to raises money to pay for the infrastructure in the various provinces. we are doing that still today. but he says that the benefits outweigh the negatives here. s is not surely yu'
saying china is immune to a financial crisis. there are differences between now and 2009 when the global economy was having trouble. says china is unlikely to experience a financial crisis of its own. as long as there is no huge capital flight, like we had late last year, an estimated $1 trillion flowed out of china last year, a lot of confidence issues. not all of that was capital flight, but it was alarming to the leadership. up through march, they reassure the economy that the yuan was not going to devalue significantly. if there is going to be a crisis, he says it is likely to be at the banks with nonperforming loans. the worst-case scenario would be if the banks are not going to lender, then companies will not row and they could see the economy -- will not bar row and they could see the economy grind
in hong kong,a.m. these of the stories making headlines around the world. is warned it faces a year-long recession of voters leave the european union next month. the treasury has made an assessment of the short term impact of a brexit and will publish the results today. scenario, gdp in 3.6% below the estimate. house prices would fall.
myanmar's has urgent government to enact further reforms to boost free markets, development, and human rights. the method of fact no leader aung san suu kyi after the u.s. lifted sanctions on 10 state-run companies and banks. turkey's prime minister his replacement after a power struggle with the president. ,he currency has fallen 6% while the stock benchmark's down 16%, the worst performer among major markets. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. now japanese exports
reporting down for a seventh straight month last month. this as the yen strengthened, underscoring the challenges the prime minister is facing to revive the economy. -- chief economist you think this is a charade now, abenomics, right? i thought that have is not going to work, and it hasn't worked, but actually it is worse than that because abenomics trying to achieve 2% inflation by competitive devaluation, the wrong policy choice in japan and is pushing the economy towards financial disaster. rishaad: that is a big call. is making the chief structural imbalance in japan worse. rishaad: let's start off with
what that imbalances. >> too much income flows to the business sector and too little to the consumer sector, and also that there are major deficiencies on the supply side of the japanese economy which moreaused japan to lose than half of its export market share over the last 20 years. in the one hand, japan need structural reform. on the other hand, needs to move largelyway from sitting depreciated costs on corporate balance sheets where nobody can get it towards the consumer. inflation allow the government toborrow at much lower cost expand over the years. by actively pursuing inflation, they are shifting through competitive devaluation even
more income to the corporate sector. they made the mistake of increasing the tax burden on the consumer, so they been doing exactly the opposite of what they need. rishaad: that brings me to saying that he wants those carpets you mentioned to be giving -- corporate you mentioned to be giving big pay rises, but that's not materializing, isn't? it hasn't been materializing. they have been trying to convince corporate's to do so when it is all the other measures he has taken that have had a direct impact on corporate balance sheets. not going to be achieved, that task. rishaad: this yen weakness we have had since abenomics came into play, it's been making the situation worse because of the existence of this market share
loss by japanese companies that has ordered come to pass way before this. yes, it wasn't related to the currency. it was related to the fact that japan has deep structural problems on the supply side which relate to its labor market and the fact that they did not eliminate the lifetime employment system, but allowed it to erode over time, meaning there is a huge bulging layer of graying middle-management on fixed seniority pay, and for ,apanese companies to compete and it also decreases productivity because these people do not move jobs. there is not a lot of dynamism out there. so you need very deep structural reforms, but also tax reforms in order to get this money out of depreciation. when it since and depreciation on the corporate balance sheet,
it doesn't move to the employee or get distributed to shareholders, even the tax authorities can't get their hands on it. rishaad: that's the problem there and are not addressing it with structural reforms. something you talked about for years ago was about china. china also has to undergo deep structural changes, which reports are saying they're going through some of them. with that amount of debt at the moment, government, local, corporate debt, we are in a bit of a sticky situation. been more worried about china in terms of the pace debt to gdp, being extremely, alarmingly fast. the situation in china is not just yet excessive. in other words, unlike japan, which now the economic wheels have set the economy on a course
which we'll end with some sort of financial disaster. there is nothing policy makers do there to prevent that. scope of theve next two years to do the right thing and avoid a major crisis. it's going to be turbulent. it will be a difficult time of low growth, but by a major crisis, i mean one after which china can no longer grow at current rates. rishaad: real growth? >> real growth. that i think is not baked in. they are not only having time to do the right reforms, but like japan they are moving in the right direction in terms of trying to eliminate structural overcapacity, trying to let the market play a much bigger role in the financial markets. rishaad: until they don't want it to. that is the problem there, isn't it? in the japan experienced
1970's and 1980's is that once you start liberalizing, there is no way you can stop. you either have to go back or you have to move forward. it is true so far that the chinese have been trying to move forward, but the real reckoning is when this weakness in the economy gets the labor market. that is when we will see whether beijing is truly committed to this reforms. rishaad: great seeing you. thank you so much for coming this morning. how chinese tech companies are using crowdfunding. this is "trending business". ♪
crowdfunding to crack the u.s. market. why they gotk at into crowdfunding in the u.s.. it's not like they need the money. , going onpany way togo was a great raise visibility and crack the chinese market. the chinese company has projected sales of 600,000 ,nits, venture capital backing so their campaign was to raise $50,000. painted up raising a couple of hundred thousand dollars. the money did not matter to them, but it was a way to test the market and see how the u.s. works. -- succeedinghina in china and the u.s. are completely different beasts. platform where the tech geek will go. it is receptive and it has been
working well. indiegogo has been piloting a program to bring in more chinese tech companies. rishaad: how quickly is a growing at the moment? what about the crowdfunding companies themselves? are they encouraging this? >> exactly. indiegogo embraces this. they are doing a pilot program, bringing onuage, staff is be chinese. indiegogo has always embrace corporate's and said this is a platform for anybody to try new products. for them, they don't see it as sullying their brand. is limited to only 18 countries, of which china is not one. there are about 400 chinese firms that have gone in with a
slumbering economy. president obama is in hanoi at the start of the week long trip to asia. he is seeking stronger security ties. u.s.-vietnamese relations must stability.n regional follow me on twitter. bag, a bit of weakness in japan. shanghai remaining just marginally positive. haidi: we are starting to look a little bit better than we were half an hour ago. hong kong reversing course. gains of 3/10 of 1%. construction the leading gainers on the hang seng.
a little bit of an upside. jakarta just coming online. the nikkei 225 extending those declines, down by over 1%. we do have the yen starting to rise. we also have some disappointment, a lack of clarity after g-7 leaders met over the weekend and failed to reach any a court on currency -- accord on currency. take a look at taiwan. the aftermath of the presidential inauguration. tech stocks gaining. ,eakness coming from australia even though we are off the session lows. shanghai is up by 6/10 of 1%. taking a look at some of the winners and losers we are watching. energy sector, it continues its
retreat. the opec meeting at the beginning of june. we are seeing the top decliners in sydney. retracement in a the iron ore industry. inpex down by 2.9%. apparently put through in order of 78 million of the next iphone to their suppliers. that is pretty much bang on what we had in the previous iterations. we are seeing upsides for the supply stocks. make theech, they glass casing for the iphone, surging by almost 8%.
iphone -- apple would be introducing their first glass iphone. pegatron up by close to 5%. in terms of the dollar-yen situation, the yen strength creeping up again. seeing the other issue ,hat is driving markets today iran saying they will not be joining in on that production freeze. rishaad: having a look at those exports out of japan. this is all apparently to the strength of the yen. imports also lower. let's get to even one man. yvonne man. pressure on the
prime minister on how to revive growth. he did not get much love or support when it came to what to -- thesen what policy disappointing trade figures adding on the pressure. a seven-month decline in japan. we saw the stronger yen was the culprit after it has risen to 9% this year. imports looking -- slumping 23.3%. the trade balance much bigger than expected. 2.5 billion bigger than what economists were reporting. we have seen some supply constraints when it came to the aftermath of the earthquakes. there was some restriction when it came to supply shipments, auto-parts as well as electronics. that made have -- that may have
weighed on exports as well. we saw a lot of friction when it came to the yen as well. the finance chief talking little bit about this, the recent move in the yen has been one-sided, speculative, a different view from jacob lew that said, we are not seeing any disorderly movement yet on the yen. i made it clear that stability and exchange rates is important. excess volatility and disorderly movements and currency will have adverse effects on economic and fiscal stability. yvonne: tensions were a bit high, the sharpest views we have seen in recent years. jacob lew mentioned a little bit about disorderly movements, what constitutes that.
a pretty high bar has been set. 2011 when japan did intervene its currencies after the devastating earthquakes and tsunami. it seems like we are still very far away from that situation. looking ahead to the summit coming up this thursday, global growth concerns, foreign policy, as well as terrorism will be top issues on the agenda. .ishaad: thank you president obama is in vietnam at the start of a week long trip to asia. the former enemies edging closer together. president's the visit being digested in vietnam? >> the via many us -- the vietnamese are welcoming the president's visit. relationshiprica's
as a way to hedge against the growing assertiveness of china in the south china sea. rig014, china placed an oil and thatetnam's coast caused a lot of problems between the two countries. at that point, the chinese began -- may be more of a threat than a friend. rishaad: what does the president -- is tryingident obama to send a message to china and other countries that the u.s. very much intense to have a presence in this region. it is part of the so-called pivot to asia. united states is considering fully lifting its arms embargo to vietnam.
it partially lifted the embargo in 2014. that would send a signal to china that the united states plans to play a role in this region. rishaad: of course, the chinese have been sending a message about these two not getting too friendly. we also have human rights between these two, a thorn in the side of the relationship between hanoi and washington. john: it is a long-standing issue. the president is sure to talk about it with leaders in private and i'm sure he will mention it in public declarations. he will also meet with dissidents. vietnam released a very prominent catholic priest a day or two before the president arrived. they were perhaps trying to send some sort of message of accommodation to the u.s.
rishaad: thank you very much, indeed. let's have a look at some of the other stories we are keeping tabs on. >> it may be a presidential election year, but the san -- the u.s.d economy should be solid enough to merit a rate increase the share. jobs and inflation data are getting closer to the central banks targets. investors see a 28% chance the fed will raise rates next month. shares are making gains in sydney after the company raised its profit guidance. compared with the previous forecast of $151.3 million.
-- higher iron ore prices. founder and main shareholder has resigned from the role of chairman and executive director. the solar company says the move is intended to improve the way it is governed. shares have been suspended for over a year after the stock collapsed in half an hour of trading last may. regulators have been investigating. coming up later, the mystery surrounding egyptair growth as cairo since a submarine. tension between japan and the
rishaad: japan's exports fell for a seventh consecutive month in april. it has exposed divisions on currency policy within the g7. great to see you. what would you make of these two at the moment with a strained relationship? at the end of the day, isn't washington being a bit hypocritical? >> again, this is not necessarily anything new. we have had these divergence of opinion.
as we head into a possible hike by the fed in june or the risk referendum onit the european union. it could lead to an abrupt downside move in dollar-yen. as you suggest, the u.s. treasury has been on the offensive. the yen, the korean won, the taiwan dollar, and the rmb being in trouble for potentially manipulating their currency in some shape or form. this will continue to be a point of contention. helping atng that is the moment is the strength in the dollar, which is buying some time in terms of the pressure we have seen earlier this year. a weaker yen would make
very little difference to the japanese economy at the end of the day. it is something which exacerbates the position the country has been in for the last 20 years. >> those are all very valid points. unfortunately, it comes down to tactics and strategy. a lot ofething that countries in the world face. the tactic that is being used is to buy time and buying time by overburdening monetary policy, quantitative easing, and getting a weaker currency to support the external export. it is true that more fundamental things need to be done. the premised are of japan has been -- the prime minister of japan has been trying to
implement some of these reforms. you need to accommodate it somehow or make the medicine taste better. keep interest rates low and the currency competitive to make it more palatable to the electorate. you cannot have one without the other. rishaad: you mentioned dollar strength. is it to the whole notion we get an interest rate hike sooner than anticipated a couple of months ago or something deep-seated? revitalization, although the data has been choppy in the united states. we are looking at growth, labor market. from that perspective, the rhetoric we have been getting, we will have to wait until janet yellen speaks. she is scheduled to speak on friday this week.
we may have to wait to the following week for further statements from yellen to provide more clarity. we are at a critical juncture. we have a view that the hike will be in september. transpire, we could get some pullback in the dollar. that is the key thing to watch. it is the thing the japanese will be watching in terms of what that means for the dollar and what it would mean with a brexit. if we get an unfavorable outcome in terms of the u.k. referendum, it could give the dollar much more strength -- but not for good reasons. risk off and that would be detrimental, much more detrimental than the dollar strength we are having at this
moment. rishaad: people will be hanging on to every word janet yellen utters friday afternoon, right? >> absolutely. the subject matter is not for the following week, but you never know. you never know when policymakers speak, they could say something offhand. rishaad: are you expecting the australians to be cutting interest rates? that?uld they do --the inflation rate inflation outlook. there is this debate going on about how much is cyclical and how much is structural. we will look at the guidance. at -- given the outlook, the global inflation seems absent
and the data in australia seems very mixed, there is an opportunity for them to ease and recognize and address some of the domestic considerations. while we have had a rally in commodities, it may be not seeing through to the border economies. thank you. rishaad: great talking to you. let's have a look at some of the stories making headlines. egypt sending a submarine to search for the egyptair black box flight recorder. said nothing has been proved. it crashed into the sea on thursday en route from paris to cairo. the plane sent automatic messages about smoke in the cabin. the verdict is expected in the
trial of a baltimore police officer charged with the death of freddie gray. died last year a week after his neck was broken while he was handcuffed and shackled but unrestrained in the back of a police van. remains in the grip of record he raved -- heat wave. the monsoon is expected to bring cooler temperatures for the beginning of next month. india has had two years of poor rain. bureaus.50 hong kong not to rock the boat with protests against beijing.
rishaad: this is "trending business." china warns the people of hong kong to avoid rocking the boat or risk hurting the economy. already rocking here. ,uliette: some signs of leaking at least, and that is represented by a series of charts we have. hong kong chief executive is the least popular leader since the return to china's sovereignty. this is a public opinion poll
conducted by hong kong university. plungedal their tea has -- his popularity has plunged. his approval rating holding at a level of about 40 on a scale of 0-100. we can see some measurable statistics showing we are seeing hong kong's economy start to slow down. this chart is about retail sales. it goes back to june 2010. retail sales started to taper off. a big plunge coming through earlier this year and in the march quarter, we saw a retail sales down 12% in hong kong. this is due to the crackdown on anticorruption and the selling of luxury goods. hong kong's economy unexpectedly
contracted by .4% in the first three months of the year compared to the prior quarter. that was the steepest drop we have seen since 2011. hong kong property prices are starting to fall, down about 12% from their peak in september of last year. sachs and other banks predicting a further drop in hong kong housing prices. goldman is predicting we could see 20% more downward pressure on hong kong. the number of hong kong homeowners with apartments worth less than their mortgages has soared in the first quarter. we have those metrics. downso have -- auto sales 41% this year.
seems ther not, it hong kong economic boat may already indeed be rocking. rishaad: a quick snapshot of what is going on with the trading day. hong kong, shanghai, japan looking like this. shanghai composite up 7/10 of 1%. against a backdrop where we are seeing the nikkei 225 once again having some losses. situation in taipei. a bit of an improved picture. the dollar retreating, emerging markets also climbing. a potential u.s. interest rate
iranian exports could top 2.2 million barrels a day according to a state news agency. brent for july delivery around $40.50 a barrel. aimedent obama in vietnam at building stronger chives in the face -- ties in the face of growing china influence. he's looking to upgrade relations with the power with a rapidly expanding middle-class, promising market for american goods. let's have a look at what's going on elsewhere. volatility and the chinese markets may be down, but we are having a volatile start to a brand-new trading week. there is a sense of wait and see , waiting for more comments in beijing. janet yellen towards the end of the week. the will better inform markets as to whether june is alive event.
-- a live event. is speculation on whether the bank of japan will expand stimulus next june. having said all of that, this is what we are seeing. swings between gains and losses, but the kleins coming through from sydney, off the session 3/10 of 1%. off that session low, down just 1%. the stronger yen weighing on sentiment. of accorde to a lack reached over the weekend and japan. we are seeing a strong session from taipei, the tie one index ,p 2% by a number of tech names apple suppliers in particular. a report coming through taiwanese media that 78 in
iphones is the order reportedly placed by apple to its suppliers , and markets seem to like that. shanghai up 6/10 of 1%. holdingve the yuan steady after a third straight week of losses. picture when it comes to southeast asia. singapore expecting inflation numbers later, but jakarta seeing gains of 4/10 of 1%. this is what we are watching in the tokyo session, the yen starting to creep up, weighing on a number of retail and export names. retail down by 2.6%. toan tobacco, in addition losing that packaging lawsuit in the u.k., the client up 13.5% in terms of cigarette items. we have that drop of over 7%,
the biggest tech line since october. analyst saying the company will not meet its midrange targets. quite a bit of weakness from the basic miners and in the oil space. rishaad: thank you very much indeed. g7 days of talks with finance ministers ending without consensus on currencies. also, growing division between the united states and japan. we were there at the g7 talks. we have a look at the difference between the positions. some of the biggest differences between the u.s. and japan on exchange rate policy and some years. at the center is the idea that the g-20 and g7 have agreed that countries or governments can you cane, specifically intervene if market conditions or what they call disorderly. rishaad: that's the issue, isn't it? >> defining what is disorderly
is the probably in. the finance minister keeps making the point that yen trading is speculative and one-sided. he raced this in a meeting with w said it is a le high bar to qualify for disorderly. there is that division of opinion lingering between them. japan is putting its flag in the ground at this point. rishaad: what does it mean then about japan? does it mean they will intervene? we have had so many times when there has been the threat of this hanging over us. they haven't done it since 2011 when the g7 sanctioned it. corporates aree declining -- complaining. japan isn't close to intervening right now. you can argue that the strengthening dollar will help
japan and make intervention less necessary. they are making the point that this option is there to them. they are making clear that if the yen was to go off on a tear over coming months that they can go in and sell it. japan is being very firm on that point. rishaad: this brings us to the trade numbers. they do tell us we could argue that the yen's recent strength has affected their export position. >> definitely. to be sure, there is the global , and exports from a lot of countries are week. ak.are qe it shows the pressure that shinzo abhi is under to reform. when you see export numbers like
that and the yen where it is, it keeps the pressure on japan policy makers to act. expect they certainly will response over the weeks and months ahead. rishaad: thank you indeed for that. adviser says china may miss a historic opportunity if it does not invest more in infrastructure. he is saying it is the best way to boost growth and won't undermine efforts to overhaul the economy. is the story here exactly? about thistalking sort of damocles hanging over chinese authorities is over the debt pile and the slowing economy and what to do to remedy the situation. an influential former pboc advisor and senior fellow at an advisory body to the chinese government in beijing spoke this weekend, saying that we can go
back to the tried and true remedy, and that is spend more on infrastructure. that is what beijing has traditionally done. he says the timing right now is right for a number of reasons. the global economic slowdown helps, falling commodity prices interest rate environment generally speaking, and the overcapacity issues in china. of excesseduce a lot capacity in key industries if they spend more on infrastructure projects. they can put people to work and get infrastructure build, even though someone argued that they have overbuilt. critics also would say that this could exacerbate that credit binge that we saw, especially following the global financial --sis when they unreleased ineased 4 trillion yuan
stimulus measures. they say that china will miss a historic opportunity if they do not stoke growth through infrastructure spending now. rishaad: surely he is not saying that china is immune to financial crisis. what does he see as the biggest risk? he says china is unlikely to experience a financial crisis this time around as long as there is no large scale capital flight, which of course we had late last year and the early part of this year when the estimated $1 trillion flowed out of china according to bloomberg intelligence. was capitalhat flight, but it was alarming to authorities here. it is a big reason why they tried to talk some confidence into the market and reassure the when nothat the yuan
depreciate significantly. the big crisis he said would be in the banking system if nonperforming loans rise significantly. rishaad: thank you very much indeed for that. right, let's take about some other stories. toyota teaming up with the segway to design better wheelchairs, giving access to balancing technology. it helps to introduce a new version of its wheelchair using two sets of powered wheels to walk up and down stairs and help disabled people stand face-to-face with one another. agreement came after toyota pledged $1 billion into research into artificial intelligence and robotics. make planes in china because it is cheaper to import them. the plane maker is considering closing its factory and will make a final decision by the end of the year. it says chinese demand for jets has fallen due to a lack of government incentives and tax laws that make it cheaper to in craft -- import aircraft.
on elon musk and jeff bezos in the space race, launching a scale model of a resumes will -- of a reasonable -- of a reasonable -- reusable spacecraft later today. the spacecraft this is posted be more cost-effective as india plans to spend only $1 billion on its entire space program through next march. that is a fraction of nasa's $19 billion budget. right, chinese technology companies going online for crowdfunding to crack the u.s. market. we've been looking into this. we talked about this earlier. they don't necessarily need the money, so why do this? >> the greatest mystery for a chinese company is the american consumer. this platform is a great way to test the market on a small way. they don't have to pay to set up an indiegogo campaign, so they concede if there is any interest
in their product. or, ampany makes a reject smart led home theater, and they wanted to raise $50,000. instead, they raised a couple of hundred thousand dollars and got lots of glowing reviews in tech blogs. it is fantastic from that perspective, even though in china they are a company that has raised $61 million. rishaad: how quickly is this and our crowdfunding sites trying to encourage this? for indiegogo, they are embracing this trend. they started to see some chinese companies do it on their own and decided to set up a chinese language website to help chinese companies do this. they see this as a great win, because they take a cut of the campaign. kickstarter, another big crowdfunding website, they have
a limited amount of countries, on the 18 countries able to participate, and china is not one of them. what they found his chinese countries will find a u.s. partner and still get on the website, so it is a mixed bag, but looks like an interesting opportunity. rishaad: crowdfunding not a stranger to china, is it? >> if you're looking for innovation in china, look for finance. crowdfunding in china is an explosive scene. it probably needs some more regulation and a lot of problems with fraud. said, these companies have familiarity with the notion of what crowdfunding is, but interestingly because the chinese companies are closer to manufacturing and supply chain, they are able to produce the products much faster. a product onu buy kickstarter or indiegogo, you are buying an idea and taking a risk.
whether or not they are able to produce the idea, who knows. ,or somebody based in toledo it's much harder to then bring a product to market because they are so far away from the supply chain, where somebody like this projector maker, they know the supply chain already. for them, bringing it to market is much more straightforward. rishaad: thank you very much indeed. we have to take a break. gives president warning about jumping to conclusions about flight 804. there are many outstanding questions. ♪
year-long recession of voters decide to leave the european union next month. the treasury made an assessment of the short-term impact of a brexit. they will publish the results today. a shockat it calls innario, it forecasted gdp 2018, 3 point 6% below the current estimate, a 4.3% increase. inflation seen as rising sharply while house prices would fall. kerry has urged myanmar's civilian led government to enact further reforms boosting free-market development and human rights. kyi amet aung san suu week after the u.s. lifted sanctions on 10 state run companies and banks. the abuse of people in western myanmar remains a sticking point, with aung san suu kyi asking for time and space to find a solution. south korea has rejected the of talks unless pyongyang dismantles its nuclear
program. itsunday, pyongyang said offered working level discussions, but the defense ministry and soul expressed regret that the offer came without mention of the nuclear issue. north korea carried out a fourth nuclear test this year, claiming to have developed a hydrogen bomb. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. well, let's return to one of her earlier stories, the crash of egypt air flight 804, submarine joining the hunt with nothing yet known about what happened. joining by webcam from new delhi, mark martin. what do we know on this monday that we didn't know on friday? clear is thetty theory of terror is getting further.
what we know from last week is that an electrical fire on board and a fire in the clock it and cargo compartment seems to be taking center stage in the investigation process. what can we perhaps rule out that we could in three days ago? think there were far too many rumors and speculations about the airplane making multiple stops here and there. did try toircraft make corrective, evasive action.
and that tells me that pilots were trying to get control of the aircraft. rishaad: you have drawn some similarities between flight 8501, but the difference was that particular tragedy was in bad weather, and this one seems to have had good weather conditions. i drew a similarity between swiss air 1111 and what led to the fire was the overheating,tem leading to panic. comes across as an electrical issue, and that's why it is imperative that we get the investigation started as soon as possible so that we can determine why this happened. the reason why a say this is if some corrective
action needs to be done, this the right time to do it. rishaad: it has a remarkably good safety record, the a320 family of planes. it will be vital to get those flight recorders to the surface. >> absolutely. getting the voice recorder and flight data recorders, we need to put the aircraft together and a hangar to see how the fire started and spread and what caused it. it is an outstanding airplane with a terrific safety record. nothing ever goes wrong with that air klein -- with that airplane. went down theit 15,000 feet, we don't know what happened after that. been explosion, we would see degree over a wide area, wouldn't we? >> correct.
maybe 300 not a call miles, depending on the currents. -- nautical miles, depending on the currents. from what we're seeing so far, it does look like it did break up at a lower altitude, so that gives us some indication. rishaad: take it easy. have a good one. we have to take a break. up next, the unusual excuses chinese companies are coming up for missing payments. we will tell you what they are, that is just ahead on "trending business". ♪
ishaad: right, this "trending business". defaults on the rise in china, the excuses used by firms when they miss payments. tom mackenzie is with us now. what are we talking about? >> it's the case of the dog ate listmework, and increasing of creative excuses used by chinese companies as they struggle to make payments. sealof them focus on the that is used on papers, a cement company where they weren't able to make their interest payments
because they needed a seal. rishaad: why do they need it? >> the underwriters say you can just pay it. utility company said our manager is traveling with the seal, so we can't do anything about this repayment issuance you want. then there is the question of assets being moved off the balance sheets, and managers going missing for days, sometime weeks. of when ahe example chairman went missing and the bond yields sold off. rishaad: it's really default at the end of the day. if they can't pay, they miss the payment. >> some of them are defaulting. some of them are just causing a lot of anxiety. hat fitch is saying. it points to chaos among management. rishaad: i wonder how it plays with the invoices well. we had an insurance company saying that it has gone up by something like 17 days from 30
days before. >> then you get examples of borrowing to are pay back the interest on previous loans. rishaad: a lot of pressure on the domestic bond market. high-yield bond market sold off the most since april, 10 defaults this year, more than it tired number of defaults in the 2015. you got a concern about a lack of due to london's -- due diligence. more transparency and protection for foreign investors looking to get in on the on short debt market, doubling in size and last six years. overril alone, there was $5 trillion of outstanding debt on the table. rishaad: thank you very much. have you played angry birds? over, let'snded talk about this angry birds big screen adaptation revealing why the birds are so angry.
a did top the north american box office over the weekend. the movie took $39 million, edging out captain america civil war. a shot in the arm for the game maker, which recently cut jobs due to waning interest in the franchise. that is it for this monday edition of "trending business". angie will be along to update the stories of the day. japan has won the trading is one-sided. we will break it down with the chief investment officer of a private wealth fund. you're watching bloomberg. ♪
benchmark is largely unchanged. omics asssure on aben the yen strengthens. the differences were laid bare at this weekend's talk. china warns hong kong not to rock the boat. data suggests the ship is already taking on water. president obama arrives in hanoi. haidi: keep an eye on the markets as a brand-new trading week is underway. 2/10 ofific up about 1%. a fourth straight week of losses. we are seeing the makings of a rally, although we are